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Facebook files for mega-IPO

Facebook Inc. the social-networking website that began about eight years ago in a Harvard University dorm filed with U.S. regulators Wednesday to raise $5 billion (U.S.) in an initial public offering of stock.

SAN FRANCISCO — Facebook Inc. the social-networking website that began about eight years ago in a Harvard University dorm filed with U.S. regulators Wednesday to raise $5 billion (U.S.) in an initial public offering of stock.

Facebook which now boasts more than 800 million users didn’t specify the number or price of shares it will offer. The $5 billion amount is a placeholder used to calculate fees and may change. The company based in Menlo Park Calif. hired Morgan Stanley JPMorgan Chase & Co. Goldman Sachs Group Inc. Bank of America Corp. Barclays Plc and Allen & Co. to manage the IPO.

Co-founded in 2004 by then 19-year-old Mark Zuckerberg Facebook has grown into the dominant social-networking company squelching competitors such as MySpace Inc. Revenue in 2011 surged 88 per cent to $3.71 billion (U.S.) from a year earlier according to the filing.

“Investors are still very much willing to pay up for growth” Paul Bard director of research at the investment- advisory firm Renaissance Capital LLC in Greenwich Conn. said before the filing. “There’s just phenomenal interest in this company and its potential.”

Facebook is considering a valuation of $75 billion to $100 billion (U.S.) two people with knowledge of the matter said last week. The stock would trade under the symbol FB on either the Nasdaq Stock Market or the New York Stock Exchange.

Last year Facebook said it expects U.S. regulators to require that it disclose financial results by April 30 2012 if the company hasn’t gone public by then. Facebook decided to wait until 2012 for its IPO to give Zuckerberg more time to gain users and boost sales people familiar with the matter said in 2010.

Facebook would follow a crop of social-media companies that went public in 2011 the biggest year for U.S. Internet IPOs in more than a decade according to Bloomberg data. Nineteen companies raised $6.6 billion in 2011 the most since 101 raised $11 billion in 2000 the data show.

Professional-networking site LinkedIn Corp. music- streaming service Pandora Media Inc. daily-deal site Groupon Inc. and social-gaming company Zynga Inc. all sold shares last year.

Led by Zuckerberg 27 its chief executive officer Facebook is increasing its focus on mobile technology to take advantage of the shift to smartphones and tablets. It expects its next 1 billion users to come mainly from mobile devices rather than desktop computers.

The company made at least 10 acquisitions in 2011 including group-messaging service Beluga in March. In addition to buying startups Facebook has enabled hundreds of others to get off the ground by offering an easy cheap and fast way for them to reach millions of potential customers said Shervin Pishevar a managing director at Menlo Ventures also based in Menlo Park.

“There will be a lot of $1 billion-plus companies built on these platforms” said Pishevar who owns Facebook shares.

Facebook’s biggest outside stakeholder is venture firm Accel Partners which first led a $12.7 million investment in 2005. Other investors include Microsoft Corp. and PayPal co- founder Peter Thiel as well as Greylock Partners.

As the site’s popularity grew banks hedge funds and mutual fund companies started buying stock in private transactions. In January 2011 Facebook said it raised $1.5 billion in a financing round led by Goldman Sachs Group Inc. that valued the company at $50 billion. Goldman Sachs funds managed by the firm and Digital Sky Technologies bought $500 million of stock while Goldman Sachs offered $1 billion of shares to non-U.S. clients.

While Facebook has steadily added users since its creation it has faced increased scrutiny over its protection of user data. In November the company agreed to settle privacy complaints with the Federal Trade Commission. The move may help allay criticism that it doesn’t do enough to shield the information it prods users into sharing.

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